Traditionally, it was suggested that trade associations should admit all qualified applicants, provide due process before rejecting an applicant or expelling a member, and offer certain membership benefits to non-members. These suggestions, which were designed to minimize the risk of antitrust violations, were based upon the assumption that associations controlled essential or unique resources that could not be denied to an applicant without foreclosing competition. This traditional protocol, however, changed with the Supreme Court’s decision in Northwest Wholesale Stationers, Inc v Pacific Stationery & Printing Co, 472 US 284 (1985). In Northwest Wholesale Stationers, the Court indicated that antitrust laws no longer assumed that association membership conferred a competitive advantage. Under the current analysis, the courts will employ a rule of reason and will be applied when evaluating the challenged activity or restriction, unless the challenged activity or restriction is unambiguously anti-competitive, or the association has market power or control of an essential facility within the trade or industry.

Specific membership criteria has historically been evaluated on whether there was an intent to limit competition or disadvantage a potential member. Under this analysis, courts struck down criteria that was more restrictive than necessary, or unrelated to a legitimate purpose of the association. Since the Supreme Court’s decision in Northwest Wholesale Stationers, however, the analysis has shifted to determine whether the exclusion of a potential member from an association would have an anticompetitive effect on the market. In the absence of a per se offense, such anti-competitive effect requires that the association possess market power or exclusive access to an element necessary for effective competition.

The issue of whether an association must provide benefits to non-members is governed by the "market power" analysis set forth in Northwest Wholesale Stationers. If the benefits at issue are essential to competition, then there is a greater chance it will be required to provide access to the benefits to non-members. For example, an association that provides certification of industry products must not discriminate between products of members and non-members. Similarly, an association may not exclude a non-member from an association-sponsored trade show where that exclusion would restrict the right or ability of the non-member to effectively compete in the industry. It should be noted, however, that an association may impose reasonable fees for services provided to non-members.

 


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